Putin’s Secret High-Tech Suppliers Convicted

BROOKLYN, N.Y. (CN) - A trio who secretly shipped cutting-edge technology to Russia face decades in federal prison after a New York jury convicted them of conspiracy charges Monday.

All three of individuals found guilty Monday participated in the scheme through their employment at Arc Electronics, of Houston, Texas.

Three years ago this month, the United States brought charges against 11 of Arc workers, including company owner Alexander Fishenko, a dual citizen of Russia and the United States.

Arc claimed on its website that it makes traffic lights, but U.S. investigators learned that there was more to the company after uncovering a letter sent from a specialized electronics laboratory of Russia's Federal Security Service (FSB), Russia's primary domestic intelligence agency.

Apparently some microchips that Arc had obtained for the FSB were faulty, and Russia told a Moscow-based company where Fishenko was also employed that it needed replacement parts.

"In fact, Arc manufactured no goods and operated exclusively as an exporter," the Justice Department said in a statement Monday.

Fishenko founded Arc Electronics in 1998, and he had been an executive at Moscow-based Apex System, which procures military equipment for Russia.

He pleaded guilty last month to acting as a Russian agent, among other charges, but three of his employees rolled the dice at a month-long trial in New York. Four co-conspirators have pleaded guilty as well.

A jury convicted Alexander Posobilov, Shavkat Abdullaev and Anastasia Diatlova on Monday of all the counts against them.

Prosecutors say they showed the jury that, from October 2008 to October 2012, the trio "obtained advanced, technologically cutting-edge microelectronics from manufacturers and suppliers located within the United States and exported those high-tech goods to Russia, while carefully evading the government licensing system set up to control such exports."

Russia lacks domestic production of the sophisticated goods to which Arc had access, including analog-to-digital converters, static random access memory chips, microcontrollers and microprocessors, according to a statement from the Justice Department.

Prosecutors note that "these commodities have applications, and are frequently used, in a wide range of military systems, including radar and surveillance systems, missile guidance systems and detonation triggers."

The government notes that Posobilov was the procurement director at Arc, Abduallev was the shipping manager and Diatlova was a sales associate.

"To induce manufacturers and suppliers to sell them these high-tech goods, and to evade applicable export controls, the defendants and their co-conspirators often provided false end user information in connection with the purchase of the goods, concealed the fact that they were resellers and falsely classified the goods they exported on export records submitted to the Department of Commerce," the Justice Department said in a statement.

U.S. District Judge Sterling Johnson Jr. will handle the defendants' sentencing.

Posobilov, Abdullaev and Diatlova face up to 20 years in prison for each violation of the International Emergency Economic Powers Act and the Arms Export Control Act. Posobilov alone was convicted of a money-laundering charge, which carries up to 20 years in prison as well.

Each conspiracy conviction also carries a maximum five-year sentence.

Former Arc owner Fishenko is also awaiting sentencing.

U.S. Attorney Robert Capers called the defendants "key players in a sprawling scheme to illegally export sophisticated technology to Russia."

"Through lies and deceit, the defendants and their co-conspirators sold over $30 million of microchips, much of which was destined for Russian military and intelligence agencies," Capers said in a statement.

Assistant Attorney General for National Security John Carlin meanwhile slammed the defendants for having "jeopardized our national security."

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